Thursday, June 16, 2011

2. Subsidizing the San Francisco 49ers, One Year Later: How to Lose a "Municipal Stadium"

Dear Santa Clarans:

When the 49ers' paid "stadium boosters" wanted your vote on Measure J last June, they went through some tortured verbal gymnastics to persuade us that this stadium was somehow "ours."  Now, a year later, we can finally see how untruthful that really was. 

The City Council formed the Santa Clara Stadium Authority to own and run the stadium for the team - and to protect the interests of Santa Clarans in the stadium deal.  That Authority was originally charged with selling subsidy bonds to get the stadium built.  We were also told that the Authority would be getting the naming rights sold and the concessionaire agreements signed.

This city Agency is even stuck with selling the very same Personal Seat Licenses, or PSLs, that left behind such a stink in Oakland.

Now, we learn that the original foundation of the Santa Clara Stadium Authority is built on sand:   Not only is it exceedingly unlikely that the Santa Clara Stadium Authority can possibly raise the $330,000,000 needed for the stadium's construction - it's not even clear that the Authority could possibly operate a Santa Clara Stadium for the $20 million to $30 million every year that will cost.

In violation of the Term Sheet itself, the 49ers have even taken control of the naming rights negotiations.

In fact:  For the first time last Tuesday, we actually heard that the Stadium Authority - this same City Council - is planning on borrowing money from the 49ers just as the Redevelopment Agency will be forced to do.  Any such cash advance to the RDA will have to be paid back at an interest rate of up to 8.5% per annum.  Wait until we find out what the Stadium Authority will be charged for the loans it takes from the 49ers.

But it gets even worse:  The "solution" to our problems, apparently, is now a "triple-net" lease which puts the stadium under the control of the 49ers themselves six months out of the year - and which actually includes periodic options for the Stadium Authority to hand the stadium over to the team for the entire year, every year.
Back in February, Mayor Matthews actually tried calling the 49ers' stadium a "municipal stadium." 

Last Tuesday evening - almost exactly a year after Measure J - our city's elected officials admitted that it's no such thing. 

That's how you lose control of a "municipal stadium" - a stadium they told us was "ours."

Thanks for all of your support,

Bill Bailey, Treasurer,
Santa Clara Plays 


Thursday, June 9, 2011

1. Subsidizing the San Francisco 49ers - One Year Later

Dear Santa Clarans:

It's been a year since less than one third of Santa Clara's registered voters passed Measure J.

So, how about that $444,000,000 stadium subsidy for the San Francisco 49ers?  Well, this is what we learned on Tuesday night in City Council Chambers:

The good news is that the RDA will probably be unable to write some $28,000,000 in bonds to subsidize the 49ers' stadium for them.  However, the bad news is that the RDA may well end up borrowing from the 49ers themselves more than $30,000,000 in order to meet just the $40,000,000 commitment we made to the team when we approved Measure J.

This does matter.  If you could sell bonds and service their debt at 5.75% - no guarantees on that, by the way - then why would you borrow cash at up to 8.5%?  Because Measure J locks you into doing exactly that.  It allows us virtually no relief in a poor economy that's hammering homeowners as well as their city governments.

Wasn't the SB 211 amendment supposed to fix this by extending the authority of the RDA so that it could write those "stadium bonds"?  Apparently, that didn't work - and now, there's no going back:  The losses to our city's General Fund, some $19,500,000 over time, cannot be reversed because the SB 211 amendment cannot be rescinded. 

Anyway, that's us:  We're not only stuck with General Fund losses due to the stadium subsidy - but the costs of capital to our Redevelopment Agency are probably going to be significantly increased.  As the RDA is now authorized to collect tax increment through 2027, there will be a lot of RDA money flowing into the pockets of the 49ers, improving their cash flow but not helping Santa Clarans or any of their public agencies.

Measure J virtually assured that our Redevelopment Agency would essentially be turned into an ATM for the 49ers.  The news out of City Hall on Tuesday evening just underlined that in red.
Thanks for all of your support,
Bill Bailey, Treasurer,